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Current Tax Reading Co-Editors: Robin Boadway, Kim Brooks, Jinyan Li, and Alan Macnaughton*

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Current Tax Reading Co-Editors: Robin Boadway, Kim Brooks, Jinyan Li, and Alan Macnaughton* canadian tax journal / revue fiscale canadienne (2019) 67:4, 1319 - 39 https://doi.org/10.32721/ctj.2019.67.4.ctr Current Tax Reading Co-Editors: Robin Boadway, Kim Brooks, Jinyan Li, and Alan Macnaughton* Bev Dahlby, “Reforming the Federal Fiscal Stabilization Program” (2019) 12:18 SPP Briefing Papers [University of Calgary School of Public Policy] 1-20 (https://doi.org/10.11575/sppp.v12i0.68076) The federal-provincial fiscal transfer system both redistributes from high- to low- fiscal-capacity provinces and insures provinces against unexpected fiscal shocks. Fiscal redistribution in Canada is accomplished by (1) the equalization system, which is based on provinces’ revenue-raising capacities; and (2) federal health trans- fers and social transfers, which are given on an equal per capita basis. Insurance against fiscal shocks, which is the focus of Dahlby’s study, is provided by the equaliza- tion system and by the federal stabilization program (FSP). However, such insurance works better for some provinces than for others. Only those provinces that receive equalization can rely on it to cushion shocks to their revenue-raising capacity. The FSP augments equalization for provinces that suffer declines in their own-source revenues, but it does so only up to a cap of $60 per capita. Moreover, reductions in natural resource revenues trigger much less in FSP transfers than do reductions in non-resource revenues. Owing to a combination of these factors, Alberta gets virtually no fiscal insurance despite the fact that its revenues are very volatile relative to other provinces’. Equal- ization is of no insurance value to Alberta, since it is not an equalization recipient. In addition, as Dahlby points out, the FSP is of limited value to this province because (1) most of its volatility is caused by fluctuations in resource revenue, (2) the cap of $60 per capita precludes sizable insurance payouts when provincial revenues fall, and (3) FSP payments are based on single-year revenue reductions, so those sustained over several years are not covered. Dahlby proposes reforming the FSP so that it is based on standard insurance properties. A reformed program would be based on three core principles. First, only large unanticipated losses should be covered. Second, to preserve incentives to avoid losses, the program should cover only losses that are in excess of a deductible, and co-insurance should apply in such a way that only a proportion of eligible claims * Robin Boadway is of the Department of Economics, Queen’s University, Kingston, Ontario. Kim Brooks is of the Schulich School of Law, Dalhousie University, Halifax. Jinyan Li is of Osgoode Hall Law School, York University, Toronto. Alan Macnaughton is of the School of Accounting and Finance, University of Waterloo. 1319 1320 n canadian tax journal / revue fiscale canadienne (2019) 67:4 are covered. Third, the reformed FSP should be based on simple contracts with streamlined claims-adjustment processes. Dahlby’s proposed FSP program would take the following form. Entitlements for FSP payments would be based on shortfalls of all current-year own-source revenues, as opposed to an average of own-source revenues in the previous five years, reduced by a deductible. The fiscal stabilization would be some proportion of the shortfall, referred to as the “coverage rate.” There would be no distinction between resource and non-resource revenues, and there would be no cap. The formula would include actual own-source revenues, not potential revenues as in the equalization program. Three alternative programs are considered: program A, with a deductible of 5 percent and coverage of 50 percent; program B, with a deductible of 5 percent and coverage of 75 percent; and program C, with a deductible of 3 percent and coverage of 66 percent. FSP payments would be received in the event of revenue shortfalls, but revenues in excess of previous years would not be taxed back, and there would be no analogue of an insurance premium. Dahlby illustrates his proposal by calculating what the annual FSP payouts would have been between 1986-87 and 2017-18 for Alberta, Saskatchewan, and Newfound- land and Labrador, and then comparing these payouts with what payouts would be from the existing system if the cap were not enforced. For Alberta, programs B and C would provide significantly more than would the current formula without a cap, and program A would provide roughly the same. For Saskatchewan, only program C would provide more than the current formula. For Newfoundland and Labrador, all three programs would provide a much larger payout than the current system does. Thus, while the existence of the cap is a significant problem with the current FSP, it is not the only problem. The discriminatory treatment of natural resource revenues is also a significant problem. R.B. Richard Eccleston and Ainsley Elbra, eds., Business, Civil Society and the “New” Politics of Corporate Tax Justice: Paying a Fair Share? (Northampton, MA: Edward Elgar, 2018), 318 pages (https://doi.org/10.4337/9781788114974) What constitutes paying a fair share of taxes and how to assess whether that share has, in fact, been paid are perennial concerns in tax policy. The growing interest of civil society groups in the tax collected from multinationals around the world is, perhaps, the old concern with a new flavour. This collection features work by various authors on the topic of citizen engage- ment and the role of civil society in the contribution that corporations should make to the fisc. The chief claim of the book is that much of the emerging pressure on multinational corporations to pay their “fair share” is driven not (as one might expect) by governments but, rather, by tax justice activists and non-governmental organiz- ations (NGOs) that have inspired the public to speak out about what they expect from multinationals. The authors’ way of framing that claim connects it with the current tax reading n 1321 literature on tax governance; they note that this book (1) contributes to debates about the effectiveness and legitimacy of private governance (that is, of a system in which private firms respond to marketplace pressures instead of to government legislation); (2) evaluates the effectiveness of civil-society groups in promoting international tax reform; and (3) assesses the likelihood that governments will be able to compel corporations to pay their fair share. The authors hail from Australia, the United States, the United Kingdom, and Canada (Allison Christians and Lynn Latulippe). The collection is divided into three parts and comprises 12 chapters, each of which should be relatively accessible to a non-technical audience. The first part (chapters 1 through 3) sets out the con- text for the problem. The authors begin with the early tax campaigns and end with the Organisation for Economic Co-operation and Development’s (OECD’s) base erosion and profit shifting (BEPS) project. The responses of civil-society groups are described within that historical context. The next part (chapters 4 through 7) explores the role of particular actors. To that end, the authors join forces with a growing body of scholarship that is inter- ested in the effects that a particular individual or group might have on global tax reform projects. The authors look at the role of, among other sources of influ- ence, the Tax Justice Network, the media, tax professionals, and the responses of corporations. Finally, in the third part, the collection offers five chapters (8 through 12) that put the previous discussions in a theoretical context. These chapters consider what we can learn by using concrete case studies (for example, those provided by the Extractive Industries Transparency Initiative, the Fair Tax Mark, the Forestry Stewardship Council, and investigative journalism) of the consequences of emerg- ing modes of tax governance. Richard Eccleston and Ainsley Elbra’s thoughtful conclusion closes the volume. They attempt an assessment of whether the various civil-society initiatives have had a notable effect on the behaviour of firms (the short answer is sometimes yes, some- times no), and they speculate about whether other mechanisms might be more effective. Ultimately, they conclude that action by civil society alone is unlikely to result in transformative change; for that, political leadership will also be necessary. K.B. Mattia Anesa, Nicole Gillespie, A. Paul Spee, and Kerrie Sadiq, “The Legitimation of Corporate Tax Minimization” (May 2019) 75 Accounting, Organizations and Society 17-39 (https://doi.org/10.1016/j.aos.2018.10.004) Pierre Bourdieu probably did not imagine that his work would be used to inform a methodological framework for the analysis of how corporate tax-minimization strategies are legitimated, and yet that is precisely the authors’ aim in this article. Bourdieu’s work has inspired a generation of sociologists keen to understand the way in which power and social capital are transferred and maintained. 1322 n canadian tax journal / revue fiscale canadienne (2019) 67:4 The central question in this article is how the practice of tax minimization is maintained in the face of threats to its legitimacy. The authors’ work was carried out between September 2014 (when the Australian chapter of the Tax Justice Network, together with the trade union United Voice, released a report offering a list of ef- fective tax rates paid by Australia’s largest 200 public companies) and the time, near the end of November 2017, when the Senate inquiry into corporate tax
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